Macro-economic Variable and Its Behavioural Effect on Government Spending in Nigeria (a) (VECM Analysis)

Monogbe Tunde Gabriel; Achugbu Austin; Davies Nkanbia Llewellyn

doi:doi:10.11648/j.ajmse.20160101.11

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Macro-economic Variable and Its Behavioural Effect on Government Spending in Nigeria (a) (VECM Analysis)

Monogbe Tunde Gabriel, Achugbu Austin, Davies Nkanbia Llewellyn

Published in American Journal of Management Science and Engineering (Volume 1, Issue 1)

Received: 7 June 2016 Accepted: 17 June 2016 Published: 13 July 2016

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Abstract

The gross objective of this research work is to ascertain the behavioural effect of some key macro-economic variables to increase in government spending over a period of 1981 to 2014 using vector error correction model and ganger causality test as an estimation tools for justification. From the output of the major estimate, we found that the behavioural effect of macro-economic variables to increase in government spending are multidimensional such that some macro-economic variables such as (BOT and INTR) are a significant but inversely related to total government spending while others maintain a direct flow. The economic implication of negative balance of trade is unfavourable balance of trade which signifies that Nigerians import more in monetary term than it’s export while the negative value of the interest rate is in line with our apriori expectation. Consumer price index is positive and statistically significant which suggest double jeopardy. That is, consumers are confident to buy more when the purchasing power of naira has declined and finally, we observe significant level of unemployment. One major factor that could be responsible for this abnormities is not far from the fact that larger quantum of government spending in Nigeria is massively allocated toward recurrent expenditure while few percentage is injected into capital expenditure which amount to highly and ever teaming unemployment rate over the years. Sequel to the above findings, the study recommends that emphasis be made on productive and manufacturing sectors of the economy for massive output and encourage exportation as it is a symbol of favorable balance of trade which will further showcase government effort and help reducing the ever teaming unemployment rate in Nigeria.

Published in	American Journal of Management Science and Engineering (Volume 1, Issue 1)
DOI	10.11648/j.ajmse.20160101.11
Page(s)	1-7
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2016. Published by Science Publishing Group

Keywords

Government Spending, Macro-economic Variables, VECM

References

[1]	Ajibola Arewa and Prince Nwakahma (2013): Macroeconomic Variables and the Dynamic Effect of Public Expenditure: Long-term Trend Analysis in Nigeria Scientific Papers (www.scientificpapers.org) Journal of Knowledge Management, Economics and Information Technology, 3 (6) December 2013
[2]	Alexander, A. M. O. (1990). Public Finance in a Developing Economy: The Nigerian Case, Enugu: B&F Publications
[3]	Chris, Carroll, and Lawrence H, Surnmmers. Why have private saving rate in the united and Canada Diverged?’’: journal of monetary economic, September 1987, (249) 297
[4]	Chung-fu lai (2008), government spending on macro-economic variable: Taiwan Economic Forum 2008.9 (6), 9 Department of Economics, Fo Guang University
[5]	Chude Nkiru and Chude Daniel (2013), impact of government expenditure on the economic growth: International Journal of Business and Management Review. 1 (4), pp.64-71, December 2013
[6]	Devarajan S, Swaroop V, and Zou H, (1996), The Composition of Public Expenditure and Economic Growth, Journal of Monetary Economics, 37: 313-344.
[7]	Evans paul, interest rate and expected budget deficit in the united states: journal of political economics, February 1987a, (34) 58
[8]	Folster S and Henrekson M, (2001), Growth Effects of Government Expenditure and Taxation in rich countries. European Economic Review, 45 (8): 1501-1520
[9]	Gemmell, N. and Kneller R. (2001). “The Impact of Fiscal Policy on Long Run Growth, European Economy”, London
[10]	Gregoriou, A & Ghosh, S (2007), The Impact of Government Expenditure on growth: Empirical evidence from Heterogeneous panel
[11]	Liu Chih – H L, Hsu C, Younis M. Z (2008), The Association between Government Expenditure and Economic growth: The Granger causality test of the US data, 1974 – 2002. Journal of Public Budgeting, Accounting and Financial Management, 20 (4): 439 – 452
[12]	Moshi and Kilindo, (1999): The impact of government policy on macroeconomic variables: A case study of private investment in Tanzania. AERC Research Paper 89 African Economic Research Consortium, Nairobi March 1999
[13]	Monogbe Tunde Gabriel, Davies Nkanbia Llewellyn (2016): Monetary and Fiscal Policy, Tools for Economic Growth. (Test of the Keynesian and Monetarist Preposition): Nigerian Experience. International Journal of Finance and Banking Research. 2 (3), 63-71. doi: 10.11648/j.ijfbr.20160203.12
[14]	Monogbe Tunde Gabriel (2016). The Behavioural Effect of Multinational Operations and Its Performance on the Nigeria Economy (An Empirical Investigation). International Journal of Economics, Finance and Management Sciences. 4 (3) 143-152. doi: 10.11648/j.ijefm.20160403.17
[15]	Musgrave, R. A. (1969). Fiscal Systems, London: Yale University Press Musgrave, R. A. and Musgrave, B. (1988), Public Finance in Theory and Practice, New York: McGraw-Hill Book Company
[16]	Olorunfemi, S. (2008). “Public Investment and Economic Growth in Nigeria: An Autoregressive model”, Journal of international Finance and Economics
[17]	Ram, R. (1986) “Government Size and Economic Growth: A New Framework and Some Evidence from Cross Section and Times Series Data,” American Economic Review, 76, 191-203
[18]	U.S. Treasury department, the effect of deficit on price of financial asset: theory and evidence, Washington U.S government printing office, 1984

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APA Style

Monogbe Tunde Gabriel, Achugbu Austin, Davies Nkanbia Llewellyn. (2016). Macro-economic Variable and Its Behavioural Effect on Government Spending in Nigeria (a) (VECM Analysis). American Journal of Management Science and Engineering, 1(1), 1-7. https://doi.org/10.11648/j.ajmse.20160101.11

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ACS Style

Monogbe Tunde Gabriel; Achugbu Austin; Davies Nkanbia Llewellyn. Macro-economic Variable and Its Behavioural Effect on Government Spending in Nigeria (a) (VECM Analysis). Am. J. Manag. Sci. Eng. 2016, 1(1), 1-7. doi: 10.11648/j.ajmse.20160101.11

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AMA Style

Monogbe Tunde Gabriel, Achugbu Austin, Davies Nkanbia Llewellyn. Macro-economic Variable and Its Behavioural Effect on Government Spending in Nigeria (a) (VECM Analysis). Am J Manag Sci Eng. 2016;1(1):1-7. doi: 10.11648/j.ajmse.20160101.11

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@article{10.11648/j.ajmse.20160101.11,
  author = {Monogbe Tunde Gabriel and Achugbu Austin and Davies Nkanbia Llewellyn},
  title = {Macro-economic Variable and Its Behavioural Effect on Government Spending in Nigeria (a) (VECM Analysis)},
  journal = {American Journal of Management Science and Engineering},
  volume = {1},
  number = {1},
  pages = {1-7},
  doi = {10.11648/j.ajmse.20160101.11},
  url = {https://doi.org/10.11648/j.ajmse.20160101.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ajmse.20160101.11},
  abstract = {The gross objective of this research work is to ascertain the behavioural effect of some key macro-economic variables to increase in government spending over a period of 1981 to 2014 using vector error correction model and ganger causality test as an estimation tools for justification. From the output of the major estimate, we found that the behavioural effect of macro-economic variables to increase in government spending are multidimensional such that some macro-economic variables such as (BOT and INTR) are a significant but inversely related to total government spending while others maintain a direct flow. The economic implication of negative balance of trade is unfavourable balance of trade which signifies that Nigerians import more in monetary term than it’s export while the negative value of the interest rate is in line with our apriori expectation. Consumer price index is positive and statistically significant which suggest double jeopardy. That is, consumers are confident to buy more when the purchasing power of naira has declined and finally, we observe significant level of unemployment. One major factor that could be responsible for this abnormities is not far from the fact that larger quantum of government spending in Nigeria is massively allocated toward recurrent expenditure while few percentage is injected into capital expenditure which amount to highly and ever teaming unemployment rate over the years. Sequel to the above findings, the study recommends that emphasis be made on productive and manufacturing sectors of the economy for massive output and encourage exportation as it is a symbol of favorable balance of trade which will further showcase government effort and help reducing the ever teaming unemployment rate in Nigeria.},
 year = {2016}
}

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TY  - JOUR
T1  - Macro-economic Variable and Its Behavioural Effect on Government Spending in Nigeria (a) (VECM Analysis)
AU  - Monogbe Tunde Gabriel
AU  - Achugbu Austin
AU  - Davies Nkanbia Llewellyn
Y1  - 2016/07/13
PY  - 2016
N1  - https://doi.org/10.11648/j.ajmse.20160101.11
DO  - 10.11648/j.ajmse.20160101.11
T2  - American Journal of Management Science and Engineering
JF  - American Journal of Management Science and Engineering
JO  - American Journal of Management Science and Engineering
SP  - 1
EP  - 7
PB  - Science Publishing Group
SN  - 2575-1379
UR  - https://doi.org/10.11648/j.ajmse.20160101.11
AB  - The gross objective of this research work is to ascertain the behavioural effect of some key macro-economic variables to increase in government spending over a period of 1981 to 2014 using vector error correction model and ganger causality test as an estimation tools for justification. From the output of the major estimate, we found that the behavioural effect of macro-economic variables to increase in government spending are multidimensional such that some macro-economic variables such as (BOT and INTR) are a significant but inversely related to total government spending while others maintain a direct flow. The economic implication of negative balance of trade is unfavourable balance of trade which signifies that Nigerians import more in monetary term than it’s export while the negative value of the interest rate is in line with our apriori expectation. Consumer price index is positive and statistically significant which suggest double jeopardy. That is, consumers are confident to buy more when the purchasing power of naira has declined and finally, we observe significant level of unemployment. One major factor that could be responsible for this abnormities is not far from the fact that larger quantum of government spending in Nigeria is massively allocated toward recurrent expenditure while few percentage is injected into capital expenditure which amount to highly and ever teaming unemployment rate over the years. Sequel to the above findings, the study recommends that emphasis be made on productive and manufacturing sectors of the economy for massive output and encourage exportation as it is a symbol of favorable balance of trade which will further showcase government effort and help reducing the ever teaming unemployment rate in Nigeria.
VL  - 1
IS  - 1
ER  -

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Author Information

Monogbe Tunde Gabriel

Department of Finance and Banking, Faculty of Management Science University of Port Harcourt, Rivers State, Nigeria
Achugbu Austin

Department of Banking and Finance, Chukwuemeka Odumegwu Ojukwu University, Anambra State, Nigeria
Davies Nkanbia Llewellyn

Department of Banking and Finance, Chukwuemeka Odumegwu Ojukwu University, Anambra State, Nigeria

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APA Style

Monogbe Tunde Gabriel, Achugbu Austin, Davies Nkanbia Llewellyn. (2016). Macro-economic Variable and Its Behavioural Effect on Government Spending in Nigeria (a) (VECM Analysis). American Journal of Management Science and Engineering, 1(1), 1-7. https://doi.org/10.11648/j.ajmse.20160101.11

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ACS Style

Monogbe Tunde Gabriel; Achugbu Austin; Davies Nkanbia Llewellyn. Macro-economic Variable and Its Behavioural Effect on Government Spending in Nigeria (a) (VECM Analysis). Am. J. Manag. Sci. Eng. 2016, 1(1), 1-7. doi: 10.11648/j.ajmse.20160101.11

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AMA Style

Monogbe Tunde Gabriel, Achugbu Austin, Davies Nkanbia Llewellyn. Macro-economic Variable and Its Behavioural Effect on Government Spending in Nigeria (a) (VECM Analysis). Am J Manag Sci Eng. 2016;1(1):1-7. doi: 10.11648/j.ajmse.20160101.11

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@article{10.11648/j.ajmse.20160101.11,
  author = {Monogbe Tunde Gabriel and Achugbu Austin and Davies Nkanbia Llewellyn},
  title = {Macro-economic Variable and Its Behavioural Effect on Government Spending in Nigeria (a) (VECM Analysis)},
  journal = {American Journal of Management Science and Engineering},
  volume = {1},
  number = {1},
  pages = {1-7},
  doi = {10.11648/j.ajmse.20160101.11},
  url = {https://doi.org/10.11648/j.ajmse.20160101.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ajmse.20160101.11},
  abstract = {The gross objective of this research work is to ascertain the behavioural effect of some key macro-economic variables to increase in government spending over a period of 1981 to 2014 using vector error correction model and ganger causality test as an estimation tools for justification. From the output of the major estimate, we found that the behavioural effect of macro-economic variables to increase in government spending are multidimensional such that some macro-economic variables such as (BOT and INTR) are a significant but inversely related to total government spending while others maintain a direct flow. The economic implication of negative balance of trade is unfavourable balance of trade which signifies that Nigerians import more in monetary term than it’s export while the negative value of the interest rate is in line with our apriori expectation. Consumer price index is positive and statistically significant which suggest double jeopardy. That is, consumers are confident to buy more when the purchasing power of naira has declined and finally, we observe significant level of unemployment. One major factor that could be responsible for this abnormities is not far from the fact that larger quantum of government spending in Nigeria is massively allocated toward recurrent expenditure while few percentage is injected into capital expenditure which amount to highly and ever teaming unemployment rate over the years. Sequel to the above findings, the study recommends that emphasis be made on productive and manufacturing sectors of the economy for massive output and encourage exportation as it is a symbol of favorable balance of trade which will further showcase government effort and help reducing the ever teaming unemployment rate in Nigeria.},
 year = {2016}
}

Copy | Download

TY  - JOUR
T1  - Macro-economic Variable and Its Behavioural Effect on Government Spending in Nigeria (a) (VECM Analysis)
AU  - Monogbe Tunde Gabriel
AU  - Achugbu Austin
AU  - Davies Nkanbia Llewellyn
Y1  - 2016/07/13
PY  - 2016
N1  - https://doi.org/10.11648/j.ajmse.20160101.11
DO  - 10.11648/j.ajmse.20160101.11
T2  - American Journal of Management Science and Engineering
JF  - American Journal of Management Science and Engineering
JO  - American Journal of Management Science and Engineering
SP  - 1
EP  - 7
PB  - Science Publishing Group
SN  - 2575-1379
UR  - https://doi.org/10.11648/j.ajmse.20160101.11
AB  - The gross objective of this research work is to ascertain the behavioural effect of some key macro-economic variables to increase in government spending over a period of 1981 to 2014 using vector error correction model and ganger causality test as an estimation tools for justification. From the output of the major estimate, we found that the behavioural effect of macro-economic variables to increase in government spending are multidimensional such that some macro-economic variables such as (BOT and INTR) are a significant but inversely related to total government spending while others maintain a direct flow. The economic implication of negative balance of trade is unfavourable balance of trade which signifies that Nigerians import more in monetary term than it’s export while the negative value of the interest rate is in line with our apriori expectation. Consumer price index is positive and statistically significant which suggest double jeopardy. That is, consumers are confident to buy more when the purchasing power of naira has declined and finally, we observe significant level of unemployment. One major factor that could be responsible for this abnormities is not far from the fact that larger quantum of government spending in Nigeria is massively allocated toward recurrent expenditure while few percentage is injected into capital expenditure which amount to highly and ever teaming unemployment rate over the years. Sequel to the above findings, the study recommends that emphasis be made on productive and manufacturing sectors of the economy for massive output and encourage exportation as it is a symbol of favorable balance of trade which will further showcase government effort and help reducing the ever teaming unemployment rate in Nigeria.
VL  - 1
IS  - 1
ER  -

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